Well, when I applied to Oxford, I was a bit put off by the different-ness of the application process (the whole applying to a college, having to go up and stay there overnight during school term time in case you were to be interviewed by more than just your first choice college, the icy cold room I was put in with only a bar heater to keep it warm... already becoming a thing of the past once I actually got there - lots of money has been spent on accommodation in Oxford colleges in the last 25 years). However, once I started there, I got to see the advantages of the college system: my college had mainly fantastic accommodation (and mine was particularly comfortable, with shower room next to my underfloor-heated bedroom, and kitchen facilities for my use opposite) and other facilities, all heavily subsidised, right in the centre of Oxford. I could walk to every venue I needed to get to. An awful lot of opportunities were offered to me on a plate either for free or for very little money - I was overwhelmed by the number of opportunities each separate college could offer its students without expecting them to cough up more and more cash to pay for them. What's more, I was lucky and had a succession of excellent tutors and thrived under the tutorial system. I have extremely fond memories of my time there and the inspirational people who took the time to be interested in my opinions and to share their own with me.
I did not find Oxford an overwhelmingly expensive place in which to live. It was considerably more expensive living out for a year, though, significantly less luxurious, and definitely did require ownership of a bicycle. Living out meant I had to pay for accommodation in Oxford all year, not just for term time, but it was pretty easy finding work there, even within your own college (they paid you surprisingly well to work as a college scout in the holidays, cleaning the bedrooms and toilets of the conference guests! I'm sure that sort of work wouldn't have paid so well elsewhere!!!).
Obviously, I had friends who were not nearly so happy with their time there - I agree with whoever it was that said it can be a bad thing if you do not see eye to eye with your tutor. Also, some people did find it pressurised and wished they had chosen to go elsewhere - again, I think it depended on your subject, your tutors, your choice of friends and extra-curricular activities, and your personality. It is by no means the best place for everyone, it can definitely chew some good people up and spit them out, but it cannot be denied that it does have a lot to offer.
As for the other people I was at Oxford with - I met people from a whole range of different backgrounds and nationalities.
I wouldn't change the choices I made for myself for the world - it was the right choice for me. I am not convinced it would suit both my children, though. I will, however, if they are interested, make sure I help them research what Oxford and Cambridge have to offer these days, as I'm sure it has changed from the Oxbridge I applied to when I was a teenager.